Commercial Agents Regulations: Going, Going… Staying Put
On 13 February 2025, the Department for Business and Trade published its response to its consultation on the deregulation of the Commercial Agents (Council Directive) Regulations 1993 (SI 1993/3053) (CARs). We previously reported that this consultation was initiated by the previous Conservative government. At the time, we were intrigued to find out whether the new Labour government would continue with the consultation.
The government has now confirmed that the CARs will remain in force without amendment. The consultation, launched by the former Conservative government, had sought proposals on new legislation to prevent new commercial agency arrangements being created under the CARs.
The CARs are a product of the UK's previous EU membership. They introduce terms into arrangements between a business (principal) and a commercial agent (that is, a self-employed intermediary who has authority to negotiate the sale or purchase of goods on the principal's behalf, or to negotiate and conclude the sale or purchase of goods on the principal's behalf and in its name). Many of these terms cannot be excluded, including the right to a written contract, certain provisions relating to commission, and the agent's right to compensation on termination in certain circumstances. The CARs are relevant to some franchise systems, such as mobile phone retail stores which sell hardware and phone contracts.
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Subscribe nowThe government's response describes the consultation responses as polarised:
- Commercial agents generally welcome the security provided by the CARs when negotiating contracts, particularly with EU principals. Some raised concerns that scrapping the CARs may make it harder to negotiate with principals, which tend to be larger companies, and could also affect the attractiveness of the commercial agent profession.
- Principals were more critical of the CARs, arguing for example that they limited the ability to negotiate, applied only to goods contracts and created an unequal relationship between agents and principals. Some also argued that the CARs prevented termination of underperforming commercial agents.
Despite the polarised feedback, the government concludes overall that the CARs work well for commercial agents and are well understood by consultation respondents. Although it acknowledges concerns from principals that the CARs impair their ability to negotiate freely, there is not sufficient evidence to suggest that this is a major issue or that there is a strong case for change. This decision helps avoid another potential point of divergence between the UK and EU.
